The sequester, explained
Posted by Suzy Khimm
on September 14, 2012 at 2:35 pm

The White House has released its plan explaining how the sequester’s mandatory spending cuts to defense and domestic spending will be implemented in 2013. Here’s the background on what the sequester is, how it happened and what happens from here:

What is the sequester?

It’s a package of automatic spending cuts that’s part of the Budget Control Act (BCA), which was passed in August 2011. The cuts, which are projected to total $1.2 trillion, are scheduled to begin in 2013 and end in 2021, evenly divided over the nine-year period. The cuts are also evenly split between defense spending — with spending on wars exempt — and discretionary domestic spending, which exempts most spending on entitlements like Social Security and Medicaid, as the Bipartisan Policy Center explains. The total cuts for 2013 will be $109 billion, according to the new White House report.

Under the BCA, the cuts were triggered to take effect beginning Jan. 1 if the supercommittee didn’t to agree to a $1.2 trillion deficit-reduction package by Nov. 23, 2011. The group failed to reach a deal, so the sequester was triggered.

Why does everyone hate the sequester so much?

Legislators don’t have any discretion with the across-the-board cuts: They are intended to hit all affected programs equally, though the cuts to individual areas will range from 7.6 percent to 9.6 percent (and 2 percent to Medicare providers). The indiscriminate pain is meant to pressure legislators into making a budget deal to avoid the cuts.

How would these cuts affect the country?

Since the details just came out, it’s not entirely clear yet. But many top defense officials have warned that the cuts will lead the military to be “hollowed out.” Democratic legislators have similarly warned about the impact on vital social programs. And defense, health care and other industries that are significantly dependent on federal spending say that major job losses will happen if the cuts end up taking effect.

At the same time, if legislators try to avoid the sequester without replacing it with real deficit reduction, the U.S. could face another credit downgrade.

Why did Congress and the White House agree to the sequester in the first place?

The government was approaching its debt limit, which needed to be raised through a congressional vote or else the country would default in early August 2011. While Democrats were in favor of a “clean” vote without strings attached, Republicans were demanding substantial cuts in exchange for raising the debt limit.

President Obama and congressional leaders ultimately agreed to the BCA, which would allow the debt ceiling to be raised by $2.1 trillion in exchange for the establishment of the supercommittee tied to the fall-back sequester, as the Center for Budget and Policy Priorities explains. The deal also includes mandatory spending reductions on top of the sequester by putting caps on non-entitlement discretionary spending that will reduce funding by $1 trillion by 2021.

Who supported the debt-ceiling deal?

Party leaders, the White House and most members of Congress supported the debt-ceiling deal: The BCA passed on a 268-161 vote in the House, with about one-third of House Republicans and half of House Democrats opposing it. It passed in the Senate, 74-26, with six Democratic senators and 19 Republican senators opposing it.

Can the sequester be avoided?

Yes, but only if Congress passes another budget deal that would achieve at least $1.2 trillion in deficit reduction. Both Democrats and Republicans have offered proposals to do so, but there still isn’t much progress on a deal. The political obstacles are the same as during the supercommittee negotiations: Republicans don’t want to raise taxes to generate revenue, while Democrats are reluctant to make dramatic changes to entitlement programs to achieve savings.

What happens from here?

No one on Capitol Hill thinks any deal will happen before Election Day. After Nov. 6, Congress will have just a few weeks to come up with an alternative to the sequester. The challenge is complicated by the fact that the Bush tax cuts, the payroll tax, unemployment benefits and a host of other tax breaks are all scheduled to expire Dec. 31. The cumulative impact of all of these scheduled cuts and changes is what’s popularly known as the fiscal cliff. There’s already talk of passing a short-term stopgap budget plan during the lame-duck session to buy legislators more time to come up with a grand bargain.

Democrats to Look at Further Sequester Deferrals.
By Corey Boles
January 29, 2013, 5:50 PM.

Senate Democrats are considering further short-term deferrals of spending cuts set to be implemented from March 1, but only through a combination of increased tax revenue and cuts elsewhere to the federal budget, Majority Leader Harry Reid (D., Nev.) said.

The idea would essentially be a continuation of the current strategy to shift the burden of $1.2 trillion in cuts to defense and spending on other domestic programs by increasing tax revenue and finding spending cuts both parties could agree to.

But by insisting that future deferrals of the spending cuts, known in budgetary jargon as the sequester, include new revenue, Mr. Reid is almost certain to run into stiff opposition from Republicans, who have insisted they aren’t open to any further tax increases.
Two top GOP Senate leaders were quickly dismissive of the plan, saying that they wouldn’t contemplate any tax increases as part of an effort to avoid the sequester beginning to take effect.

WASHINGTON (AP) -- Driven by frustration over deficits and debt, Republican conservatives are pushing a politically risky move to permit painfully large automatic spending cuts to strike the Pentagon and domestic programs alike in an effort to force Democrats into making concessions on the budget.

It's a remarkable turnabout from last year, when GOP leaders were among the loudest voices warning of dire consequences for the military and the economy if more than $100 billion worth of across-the-board cuts were allowed to take effect. Now, even as defense hawks fume, Republicans see the strategy as their best chance of wringing cuts from costly government benefit programs like Medicare that President Barack Obama and his Democratic allies have been reluctant to touch.

The move is fraught with risk. Some $43 billion would be cut from the Pentagon budget between March and October if battling Democrats and Republicans can't agree on an alternative. Equal cuts would hit domestic programs, although the health care programs that are major drivers of future deficits are largely exempt.

"In terms of the political dynamic here, defense spending is only 20 percent of the federal budget, but it's taking 50 percent of the cuts, which means it's going to be hitting the Republicans a lot harder than the Democrats," said defense analyst Loren Thompson. "Most of the nation's big military bases and many of its defense factories are located in Republican strongholds like the South, so Republicans are hurting themselves more than the Democrats by insisting on going forward with sequestration."

The automatic cuts, known as a "sequester" in Washington-speak, are the penalty for the failures of the 2011 deficit "supercommittee" and subsequent rounds of budget talks to produce an agreement.

Along with the threatened expiration of Bush-era tax cuts, the sequester was a major element of the so-called fiscal cliff crisis that gripped the country as the new year dawned. While most of the tax cuts - except for upper-bracket income - were made permanent, negotiators could only agree on a two-month reprieve to the sequester after finding $24 billion in replacement money that reduced this year's round of cuts from $109 billion to $85 billion. Eight more years of cuts, totaling almost $1 trillion, still remain.

The austerity, economists say, would slow down the economy. Under a formula by the Congressional Budget Office, a $43 billion cut in defense spending could cost 300,000 jobs this year.

On Wednesday, the government reported that the economy shrank by 0.1 percent in the last quarter of 2012 and said a slowdown in defense spending and uncertainty over the automatic spending cuts could have kicked in at the start of the year.

Last year, Republicans issued dire warnings of the impact the cuts would have. Defense hawks like Sens. John McCain, R-Ariz., and Lindsey Graham, R-S.C., made campaign tours in political swing states like Virginia and Florida lambasting the cuts, warning that the reductions would hollow out the Pentagon and cost many thousands of jobs. They reminded voters that the sequester was an idea developed by Democrats during 2011 negotiations on increasing the government's borrowing cap.

"The White House is responsible for the `sequester' that threatens our national security," House Speaker John Boehner, R-Ohio, said in September. "History has taught us we can't continue with policies that jeopardize our defenses or weaken our economy."

So twice last year, House Republicans passed legislation to replace this year's round of cuts with alternatives like curbing the growth of food stamps and requiring federal workers to contribute more to their pensions.

Democrats instead put their faith in year-end, high-level budget talks involving President Barack Obama and Boehner, but those talks failed. Later, successful negotiations between Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., solved the tax issue but produced only the two-month fix for the sequester.

This year's GOP move to embrace the sequester was hatched at a recent strategy retreat for House Republicans in Williamsburg, Va. Much of the retreat was devoted to coming up with a way to solve a more urgent issue: finding a way to get the tea party-infused House to again increase the debt limit and prevent an economically devastating first-ever default on U.S. obligations. The party agreed on a strategy to punt the debt dilemma until May or later and instead use the sequester as leverage in the budget debate.

A senior House GOP aide, who spoke on condition of anonymity to discuss party strategy, said some Republicans see the sequester as their best opportunity to achieve spending cuts. That strategy, however, is rife with potential to split open the Republican Party and pits the defense hawks against the tea party.

"The world is blowing up. I can't imagine a more devastating signal to send to the Iranians and our enemies and our friends alike than to dismantle the military," Graham said. "In a body that's known for doing pretty dumb things, this to me wins the prize."

Such concerns, however, have been overruled by Republicans frustrated by a recent loss to Obama on the issue of higher tax rates and a $60 billion disaster aid bill to address Superstorm Sandy. The reality of the political firestorm that is sure to hit if the sequester kicks in doesn't seem to be a concern.

"These are the only cuts that we've been able to get from the president, and absent any other negotiations, I understand those who say, `We're loath to give that up unless we come up with some substitute,'" said Sen. John Cornyn, R-Texas. "It's bad policy, there's no question about it. But the president could be part of the solution, and right now he's AWOL."

How people would actually react should the across-the-board cuts hit is anyone's guess. But it's not lost on anyone with institutional history that Republicans got creamed in a similar situation in 1995-96 when they sparked a partial government shutdown under the leadership of House Speaker Newt Gingrich, R-Ga.

"I'm just flabbergasted," said Scott Lilly, who was the top Democratic staffer on the House Appropriations Committee during the Gingrich shutdown. "The way they've played it, they're going to get a huge part of the blame because they're just openly accepting" the sequester.

With Pentagon uniformed military salaries exempt, the cuts to the rest of the agency are more severe, with big impacts on defense contractors and civilian Pentagon workers.

"I just don't think there's any appetite at this point in the Republican conference to `fix' the sequester," said GOP lobbyist Jack Howard. "You have to wait until it actually hits, I think. And then we'll see."

On Tuesday, Senate Majority Harry Reid, D-Nev., said the warring parties should try to figure it all out, but he set up a clash with Republicans over using new taxes to fix the problem.

Reid said the sequester cuts should be replaced "in short increments" with spending cuts and revenues like repealing oil and gas subsidies, which were discussed in earlier negotiations.

"There are many low-hanging pieces of fruit out there that Republicans have said they agreed on previously," Reid said. There's a lot of things we can do out there, and we're going to make an effort to make sure that there is - sequestration is - involves revenue."

Oh bullshit. When the Dems were in the minority we hear it was for that reason they couldn't get anything done. When they had the super majority we heard it was the Repub's fault. Now that they still have the majority it's still the minority Repub's fault.

If government spending accounts for that much of our economy we've ****ed ourselves to begin with.

How big a failure Obama's recovery really is.

It is all W's fault why can't you guys understand that? Would you just accept it and start worshiping president Obeyme. All media that doesn't agree with everything our precious leader is doing should be shutdown. Repeat after me Bush is the cause of every single problem we have~

__________________“With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion"
Steven Weinberg~

It is all W's fault why can't you guys understand that? Would you just accept it and start worshiping president Obeyme. All media that doesn't agree with everything our precious leader is doing should be shutdown. Repeat after me Bush is the cause of every single problem we have~

Not quite true. There was that time Obama blamed the Japanese tsunami.

Not quite true. There was that time Obama blamed the Japanese tsunami.

Bush caused it duh~

__________________“With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion"
Steven Weinberg~